Whether you've had your auto insurance policy with an insurer for one year or ten years, comparing insurance quotes is always a good idea - especially when you're approaching your annual renewal date. If you find a cheaper policy that fits your needs, it may be time to switch your insurance provider. Follow these steps to make canceling your car insurance policy easy:
Advise Your Provider
Contact your insurance provider to inform them of your decision to cancel your coverage with them. You will likely be asked to provide confirmation in writing of your intention to cancel your policy, complete with the effective date of the cancellation. Your coverage and premiums will not be affected by your decision until the effective date.
Your policy can be canceled mid-term, but before you decide to cancel, make sure that you inquire as to the penalties for canceling. The cancellation fees may be prohibitive, and you may decide just to discontinue your policy at your renewal date, and schedule your new policy to start then.
Refunds & Final Payments
If you pay your premiums annually, your insurance provider will likely issue a cheque for the pro-rated portion of the term remaining, minus any penalties for the cancellation. If you pay monthly, you will still owe the cancellation fees if there are any. Avoid contacting your bank to stop payment on the pre-authorized debits, as that will result in cancellation of your policy for non-payment. Cancellation for non-payment will be recorded on your car insurance history, and will affect your future premiums and possibly even your ability to secure insurance in the future.
Perhaps the most commonly received insurance discount is a discount for holding multiple insurance products/policies with the same insurance company. If you're holding your home insurance and your vehicle insurance with the same insurer, you'll likely see a line on both policies for a multi-product discount. Cancelling either policy disqualifies you from receiving this discount, so you'll likely find that whichever policy remains with your original insurer will suffer from a premium increase. You may want to consider switching all lines of business to the new insurance company if they can offer you a competitive rate.
When you switch your auto insurance policy from one company to another, keep in mind that you are effectively starting over again. This means that you need to provide basic information such as your name, address, phone number, date of birth, and driver's licence. The new insurance company will review your insurance history as well as your driving record. If you are currently paying your premium in monthly installments, keep in mind that, as a new customer, you may not be entitled to that privilege. If you do qualify for monthly premium payments, your new insurer will usually require a down payment and a direct debit method (a void cheque or completed bank form) in order to process your payments monthly instead of annually.
Your New Policy
Before you submit written notice of cancellation of your existing insurance policy, you need to make sure that you have secured a replacement policy and scheduled the start date for your new coverage. After checking for cheap car insurance quotes online, make sure that you contact the broker or provider to make the policy arrangements. Whatever the reason for the cancellation, you still need to have insurance coverage to protect you. Make sure that the effective date for your new policy and the cancellation date for your existing policy coincide to ensure that you have continuous coverage. If your insurance coverage lapses, even as an error on your part, you will not be covered in the case of an accident, and, it could mean severe legal and/or financial consequences.
Insurance policy cancellation may sound like a complicated process, but it doesn't have to be. Following these tips should help to make sure that your policy switch will be smooth and easy. Your insurance broker or provider can help you with any additional questions you might have.